My plan is to live off the dividends without touching the principle. One million dollars at an average 4% dividend throws off $40,000 a year. If the portfolio is comprised of dividend growth stocks, then that dividend increases each year at a rate greater than inflation. So, next year, you'd get a raise, and so on. Likewise, $2 million throws off $80,000 a year. So, if you know how much you need to live on, you can figure out the total you'd have to have to throw off that yearly retirement income. You can retire when you hit that number. :-)

The key (for me) is to NOT hit the principle if you can avoid it because it will reduce your dividend income and the principle acts as a nice safety net in case you have a health emergency. I'm also ignoring any stock appreciation/depreciation...

Save early, save often....

I pay no attention to rules of thumb. They say the first million is the hardest, but the second million happens very quickly because of the big numbers involved. I record our retirement totals each month in a spreadsheet and can use that spreadsheet to forecast fairly accurately into the future. I can see where we should roughly be at certain milestones in the future and the spreadsheet confirms the first million is the hardest and the second million will happen rapidly. And retirement will happen soon after. :-)

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